Elizabeth Warren or Bust, I’m Drawing the Line

One of the only aspects of the so-called “financial reform” bill that might actually protect American consumers from the banking and financial services industry’s well-known and widely documented abuses, is the creation of the Consumer Financial Protection Bureau, which, since 2007, has been proposed by Harvard Professor, outspoken consumer advocate, and one of my favorite people on the planet, Elizabeth Warren.

Ms. Warren should unquestionably be asked to head up this new Consumer Financial Protection Bureau, bribed, begged and/or pleaded with, if need be. Without her philosophy and leadership setting the standards and tone of this new bureau as it is established, it should simply be disbanded… we don’t need another federal bureau to let the banks do whatever they’d like to the American consumer. We already have every other federal agency and regulatory body for that.

Treasury Secretary Tim Geithner opposes Elizabeth Warren being appointed to head up the new bureau, and that’s why I’m writing this… to make my views on this crystal clear.

If Geithner succeeds and we end up with his witless pal, Assistant Treasury Secretary Michael Barr instead of Elizabeth Warren in this position… well, then stick a fork in me ‘cause I’m done with this administration. Well done. Burnt. It simply cannot be allowed, and I’m asking everyone I know or that’s reading this to write their representatives today to let them know that Elizabeth Warren’s appointment to head up the Consumer Financial Protection Bureau is not optional… it’s a do or die situation.

Like Dubya said: You’re either with us, or you’re against us. I’m sorry, but that’s the way it is, as far as I’m concerned.

Elizabeth Warren is the Leo Gottlieb Professor of Law at Harvard Law School. She teaches contract, bankruptcy, and commercial law. She has spent the past 30 years studying the economics of middle class families.

She became well-known to the public when she was selected to chair the Congressional Oversight Panel that was set up to investigate the Troubled Assets Relief Program, or TARP, which put her in the unenviable position of being the critical check on the U.S. Treasury Department. In that role, she became a leading proponent for increased accountability and transparency, I wonder why.

If you aren’t already familiar with Liz Warren, here’s a paragraph that will give you an idea of how she thinks and what she thinks about. She wrote the following last year in an article she published online:

“It is impossible to buy a toaster that has a one-in-five chance of bursting into flames and burning down your house. But it is possible to refinance an existing home with a mortgage that has the same one-in-five chance of putting the family out on the street–and the mortgage won’t even carry a disclosure of that fact to the homeowner. Similarly, it’s impossible to change the price on a toaster once it has been purchased. But long after the papers have been signed, it is possible to triple the price of the credit used to finance the purchase of that appliance, even if the customer meets all the credit terms, in full and on time.

Why are consumers safe when they purchase tangible consumer products with cash, but when they sign up for routine financial products like mortgages and credit cards they are left at the mercy of their creditors? Indeed, the pain imposed by a dangerous credit product is even more insidious than that inflicted by a malfunctioning kitchen appliance.”

That’s a darn good question, Ms. Warren. And I can’t imagine anyone not wanting to know the answer.

The other reason I think she’s not only the obvious, but quite literally the only choice to head up the new Consumer Financial Protection Bureau is that she’s about the only person I’ve seen who understands that we’re having a foreclosure crisis, and that it’s not just that we’re all terribly irresponsible. Here’s a few of the things she’s said over the last couple of years:

“Americans are drowning in debt. One in four families say they are worried about how they will pay their credit card bills this month. Nearly half of all credit card holders have missed payments in the past year, and an additional 2.1 million families missed at least one mortgage payment. Last year, 1.2 million families lost their homes in foreclosure, and another 1.5 million families are likely headed into mortgage foreclosure this year.”

“Nor are all costs associated with debt measured in dollars; not surprisingly, the effect on family life is considerable. Anxiety and shame have become constant companions for Americans struggling with debt. About half won’t tell a friend their credit card balances, and 85 percent of those who file for bankruptcy are struggling to hide that fact from families, friends, or neighbors.”

“Some people are in trouble with credit because they simply use too much of it. Others are in trouble because they use credit in dangerous ways. But that is not the whole story. Lenders have deliberately built tricks and traps into some credit products so they can ensnare families in a cycle of high-cost debt.”

“When markets work, they produce value for both buyers and sellers, both borrowers and lenders. But the basic premise of any free market is full information. When a lender can bury a sentence at the bottom of 47 lines of text saying it can change any term at any time for any reason, the market is broken.”

“The consumer financial services industry has grown to more than $3 trillion in annual business. Lenders employ thousands of lawyers, marketing agencies, statisticians, and business strategists to help them increase profits. In a rapidly changing market, customers need someone on their side to help make certain that the financial products they buy meet minimum safety standards. A Financial Product Safety Commission would be the consumers’ ally.”

“How did financial products get so dangerous? Part of the problem is that disclosure has become a way to obfuscate rather than to inform. According to the Wall Street Journal, in the early 1980s, the typical credit card contract was a page long; by the early 2000s, that contract had grown to more than 30 pages of incomprehensible text. The additional terms were not designed to make life easier for the customer. Rather, they were designed in large part to add unexpected–and unreadable–terms that favor the card companies.”

“Banking is based on trust. The banks get our paychecks and hold our savings; they know where we spend our money and they keep it private. If we don’t trust them, the whole system breaks down. Yet for years, Wall Street CEOs have thrown away customer trust like so much worthless trash.”

~~~~~~~~~~~~~~~~~

“Banks and brokers have sold deceptive mortgages for more than a decade. Financial wizards made billions by packaging and repackaging those loans into securities. And federal regulators played the role of lookout at a bank robbery, holding back anyone who tried to stop the massive looting from middle-class families.”

Okay, so you agree… she pretty darn terrific, right? I mean, think of it this way… we sure as heck don’t have two of her in government today. She knows what’s going on in the real life of the American consumer, not theory, but fact. And she doesn’t think whatever the banks want, they should get. I don’t know about you, but when I read over the things she has said in the paragraphs above, I want her to run for president, and if she does… I’m VOLUNTEERING, and I do mean that in all caps.

Now, let’s get to the unpleasant part… Robbin’ Tim Geithner and his Band of Scary Men.

It seems that Tim “Never-Met-A-Banker-He-Didn’t-Like” Geithner doesn’t like Elizabeth Warren at all. Personally, I find that to be indicative of a serious personality disorder, but we don’t have time to fix him, we just have to make sure his distorted view doesn’t spread like a disease and ultimately prevail.

Timmy wants Assistant Treasury Secretary Michael Barr, a man who takes the “fun” out of “dysfunction” to assume the leadership position at the new Consumer Financial Protection Bureau. I thought it might be interesting to contrast Liz Warren’s statements with a few from “The Best of Michael Barr” CD. So, here goes:

“HAMP’s pay-for-success structure aligns the interests of servicers, investors and borrowers in ways that encourage loan modifications that will be both affordable for borrowers over the long term and cost-effective for taxpayers.”

“At this early date, HAMP has already been more successful than any previous similar program in modifying mortgages for at risk borrowers to sustainably affordable levels, and helping to avoid preventable foreclosures.”

“As Secretary Geithner has noted, we are committed to transparency and better communication in all of Treasury’s programs. Accordingly, Treasury is focused on continued transparency and servicer accountability to maximize the effectiveness of HAMP.”

“The banks are not doing a good enough job. Some of the firms ought to be embarrassed, and they will be.”

“Mr. Barr said the government would try to use shame as a corrective, publicly naming those institutions that move too slowly to permanently lower mortgage payments. The Treasury Department also will wait until reductions are permanent before paying cash incentives that it promised to mortgage companies that lower loan payments.”

“They’re not getting a penny from the federal government until they move forward,” Mr. Barr said.

I know what you’re thinking… like twins, right? Like, maybe they’re the same person, that’s why you never see them together at the same time? Probably not. In fact, these two couldn’t be more different. How in the world Warren and Barr could possibly be seen as being qualified for the same job is beyond me.

And it’s not like Warren getting the job makes it a certainty that consumers will be more protected in this country. Elizabeth Warren could be God’s gift to consumer protection, but she’s still up against a huge contingent that doesn’t want anything that she wants. And an awful lot of folks in our government have a huge financial incentive to support what’s in the best interests of the banks and financial services industries. But in my view, if Mike Barr, or any of his peers, ends up running the new agency, then it’s not even worth having the new agency.

Yet, Geithner doesn’t like her because she went after him on four separate occasions when he appeared before her panel charged with investigating where the TARP funds went… and we all know how that went. And according to lots and lots of sources, Geithner not liking like Warren is no secret. And that is so 7th grade, don’t you think?

Geithner’s tried to backpedal on his opposition to Warren in the last day or so, but it doesn’t matter… who could possibly believe him? In fact, the more I hear him support her, the more nervous I’ll become.

Naked Capitalism, one of my favorite blogs, by the way, had the following to say:

“Warren is the obvious choice to head the otherwise-guaranteed-to-be-a-joke consumer financial services agency due to set up its shingle at the Fed. She has been a tireless consumer advocate, is trusted and well liked by the public at large, an effective communicator and a respected legal scholar, and is willing to stare down political opponents. All those qualities make her hugely threatening. Banksters and their lobbyist allies have been saying loudly and clearly that they are firmly opposed to having Warren head the new consumer agency. So, predictably, Geithner acts as their water-carrier.”

So, you know… here’s the deal. I’ve been holding back on tearing into the Obama Administration, believe it or not. Some may think that’s funny, because I have been critical… very critical at times. But, I’m talking about drawing-the-line type critical.

I’ve put up with watching the administration trumpeting a health care reform bill that has no potential whatsoever to reduce or even control the rising costs of health care or health insurance in this country. I’ve held back when faced with a credit card reform bill that should have made everyone involved deeply ashamed. I’ve been forced to watch a debate over the financial reforms that was so flagrantly corrupted by industry lobbyists, that it turned my stomach at times. But, I didn’t pile on the president, choosing to believe that that he was doing what he could do, Washington D.C. being the place it is.

But this is completely within President Obama’s control. He can appoint Elizabeth Warren to this new created post. He doesn’t need to do what Tim Geithner, or anyone else wants him to do, and I have to believe he sees that she is the only real choice.

So… this is it, Mr. President. Bring us Elizabeth Warren as the Director of the new Consumer Financial Protection Bureau. Let her lead the fight against the banking lobby on behalf of the American consumer.

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